Metropolitan Resources Ltd v Churchill Dulwich Ltd and ors

A “relevant transfer” under the 2006 Transfer of Undertakings (Protection of Employment) Regulations (TUPE) includes a change in “service provision” when a contract is contracted out, re-tendered or contracted back in. In Metropolitan Resources Ltd v Churchill Dulwich Ltd and ors, the Employment Appeal Tribunal (EAT) said that tribunals have to decide whether the service provided after the change was fundamentally the same as it was beforehand.

The claimants’ union, the GMB, instructed Thompsons to act on their behalf.

Basic facts

The Home Office had a contract with Migrant Helpline to provide accommodation and related support services for asylum seekers. It in turn had a number of contracts with different providers in the London area, including Churchill Dulwich Ltd (CDL).

In January 2007, Migrant Helpline decided to stop using CDL and re-tendered with Metropolitan Resources Ltd (MRL) from 26 January. Rather than terminate the contract with CDL, however, Migrant Helpline decided to allow it to run its course until 31 March at which point it lapsed.

The claimants continued to work for CDL until 31 March 2007. After their contract expired on 2 April, they argued that there had been a relevant transfer under TUPE as they had worked for the service that had transferred to MRL.

Tribunal decision

At a pre-hearing review, the employment judge said that the relevant question to answer was whether MRL carried out the same “activities” (as required under regulation 3(1)(b)(ii) TUPE 2006) as CDL.

MRL argued that because of differences between the contracts (such as a change of location and less time for accommodating the asylum seekers) the “activities” were not the same, but the tribunal judge disagreed.

MRL appealed, arguing that the tribunal judge should have adopted the “multi-factoral” approach in the 2001 case of Cheesman v Brewer Contracts Ltd. She would then have found there was no transfer because of key changes in the way the activities were carried out before and after the transfer. The company also argued there was no transfer because there was no single date on which the transfer occurred, as required by the 2006 case of Celtec Ltd v Astley.

EAT decision

But the EAT upheld the tribunal's findings and dismissed the appeal. It said that as the wording of regulation 3(1)(b) was perfectly straightforward, tribunals just needed to adopt a commonsense approach when applying the statutory words to the individual circumstances before them. There was, therefore, no need to take the approach set out in Cheesman.

The essential question for tribunals was whether “the activities carried on by the alleged transferee are fundamentally or essentially the same as those carried out by the alleged transferor”. Minor differences or differences between the activities before and after the transfer were not enough to “negate the existence of a transfer”. The tribunal in this case had done that and concluded that both companies were contracted to provide essentially the same service.

Finally, there was no need for the service provision change to have taken place on a single date as it can be effected by a series of transactions over a period of time. The tribunal was, however, entitled to find that the transfer took place on 26 January 2007, which was when the essential activities in this case transferred.

Comment

This case is important because it has established clearly that the purpose of the new service provision change provisions is to do away with the sort of detailed analysis of the particular means of provision before and after the transfer, which has historically led to so much uncertainty about whether there was a relevant transfer. In the vast majority of service provision change cases, the effect is likely to be a clear presumption in favour of a TUPE transfer, which will need clear evidence of some fundamental change to the nature of the activities (as opposed to the manner of carrying them out) in order to rebut it.